Estate Planning for Digital Assets

There are a variety of “digital assets” which you may need to consider as part of your estate plan. Some assets have market value, while others are important to your business or personal life. Examples of digital assets include the following:

Digital estate planning relates to both the assets themselves (e.g. cash, digital photos etc.) and to the technology used for accessing the assets (e.g. laptop, smart phone etc.). Most digital assets are accessed with a unique user name and password combination. Everyone knows the importance of guarding passwords carefully and changing them periodically in order to protect against identity theft and hackers. However, when an individual dies, family members may not have access to this information. Lawyers often advise a family to look for the decedent’s “important papers” and collect the decedent’s mail in order to discover information about debts and assets. These actions will not suffice when it comes to digital assets.

There are some key steps you can take toward digital estate planning. First, assemble a complete inventory of all digital assets, including a list of user names and passwords. You should state your wishes with respect to each of the assets, including whether accounts should be maintained, closed or destroyed. You should then consider how to ensure that this information will be available to the appropriate persons, while maintaining security. You may choose to place the list in a safe deposit box or give the information to a trusted family member (parents might consider giving a list of user names to one child and passwords to another, for example). You might also ask your attorney to hold the information with other estate planning documents. These simplistic solutions, however, are not ideal, given the security risks and the need to update passwords frequently.

Recently, new businesses have emerged to help people plan for their digital assets. Online services exist to allow users to securely store passwords and inventory lists, with a “digital executor” authorized to access the information upon verification of the user’s death. Such services may also allow you to indicate your wishes with respect to each digital asset, such as whether the account should stay open, be transferred to someone else, or be deleted.

The lack of uniformity among internet businesses complicates the planning process. Assuming that a family member can access a decedent’s digital assets, providers have different policies regarding the treatment of the asset upon death. With regard to email, some companies, such as Gmail, may grant family members full access to the account. Others, such as Hotmail, will provide family members with a CD of prior emails, but no ongoing access to the account. Still others, Yahoo, for example, will not release any information and will terminate the account upon notification of death. Of course, if the email provider is not notified of the death and a family member has access to the login information, then the account might continue to be accessed. Identity theft is an obvious risk.

Social media services also have varying policies. Facebook will memorialize the profile of a deceased user, which prevents access to the account but leaves the decedent’s “wall” open for family and friends to pay their respects. Alternatively, the family can request that the account be removed entirely. Upon notification of a death, Facebook will remove the decedent’s profile from public search results and prevent future log-in attempts by others. Twitter’s policy is to allow the “next of kin” to both close the account and obtain an archive of all of the decedent’s public tweets. LinkedIn will allow a family member to close a deceased user’s account by submitting an online form.

The treatment of digital assets in the event of incapacity is also important to consider. The same issues regarding access to passwords and accounts apply in the case of someone who has become disabled or incapacitated. We recommend having a durable power of attorney in place, with language that includes the authority for an agent to access your digital assets. If you have extensive or particularly valuable digital assets, you need to be sure that the agent you select is sufficiently tech savvy to deal with the various accounts and online services.

The law has yet to catch up with the digital world. Lawyers and their clients may find themselves charting new territory when dealing with digital assets in the context of estate planning. However, digital assets have become a sufficiently important part of our daily lives that it is necessary to include them in the planning process.